The rising costs of purchasing a home, up nearly 40% compared to before the pandemic, are making it incredibly hard for young people to save for a down payment. When combined with high student loan payments, rising rents, inflation, mortgage rates, and the overall cost of living, even starter homes become unaffordable for many.
As a result, young homebuyers are increasingly seeking financial support from their families. According to a recent report from Redfin, 36% of Gen Zers and Millennials who plan to buy a home expect to receive support from family to help fund their down payment. An additional 16% of Gen Zers and Millennials plan to use inheritance money for a down payment, and 13% plan to live with their parents or other family members to save for a house.
Redfin Chief Economist Daryl Fairweather highlights the challenges faced by young Americans without access to family wealth. He states, “Because housing costs have soared so much, many young adults with family money get help from Mom and Dad even when they have jobs and earn a perfectly respectable income. The bigger problem is that young Americans who don’t have family money are often shut out of homeownership.”
The report also highlights the barriers faced by Gen Zers and Millennials who are not expecting to buy a home soon. Lack of affordability is the most significant barrier, with nearly half (43%) of Gen Zers and Millennials saying they’re unlikely to purchase a home soon because the homes on the market are too expensive. Roughly one-third (34%) say their ability to save for a down payment is a barrier to buying a home, followed by the ability to afford mortgage payments (29%) and high mortgage rates (29%).
